FinMin hikes retail investor quota in OFS to 20%

Retail investors can now have a bigger share in public sector undertaking’s stake sale, with the government deciding to double the quota under the offer for sale (OFS) route for them to 20 per cent .

“We have changed the retail investor quota in the offer-for-sale route. All future disinvestments will now have 20 per cent quota for small investors,” a senior finance ministry official told PTI. The retail investor quota now in OFS is 10 per cent, while 30 per cent is reserved for them in the follow-on public offer.

“The decision has been taken after consultation with Securities and Exchange Board of India (Sebi). The move will increase participation of small investors in the disinvestment programme,” the official said.

Under the OFS mechanism, at present a minimum of 25 per cent of the shares offered are reserved for mutual funds and insurance companies.

The government has been using the OFS route for disinvestment of public sector undertakings. Sebi had, in January, 2013, permitted the promoters of top 100 companies to use the auction route or OFS route to dilute stake in listed companies. It also permitted OFS in those public sector undertakings which were to meet their minimum 25 per cent public holding norms.